eBay may be considering selling Skype

Comments made by the chief executive of eBay, John Donahue, have led some analysts to believe Skype may be up for sale if the right offer is put on the table.{ad}

His comments were made to analysts when being questioned about how the auction company had performed in the last quarter of 2008. The figures were not great with revenue down 7% and profits down 31% compared to the same time period in 2007. When asked what was being done with Skype to possibly help the company as a whole he said:

The synergies between Skype and the other parts of our portfolio are minimal. We’re going to continue to run and operate the business. It’s not a distraction currently. And at such time when we have further announcements on that, we’ll let you know.

That comment is being interpreted as eBay not seeing Skype as a core part of its business and remaining a separate entity. The VoIP company continued to grow, however, adding 30 million new subscribers in the last quarter and seeing revenue increase by 26%.

MorningStar analyst Larry Witt commented:

If someone’s willing to pay the right price, I don’t think [eBay] would have a problem selling it … They will have their own internal projections on how much it’s worth, but I think they made it clear it’s not a core part of their strategy going forward.

Matthew’s Opinion
If I had just experienced bad results like eBay, but my VoIP division was still growing and increasing revenue I’d be talking that up as a positive in any analyst reviews. In this climate any positive should be jumped on and advertised.

The comments by Donahue do suggest that Skype isn’t seen as a major part of the eBay strategy, but is it something they really want to sell? When the markets are in such disarray it would be difficult for any company to secure the money for a Skype purchase anyway. eBay management will know this making it an unusual time to put the feelers out for a buyer.

I think eBay will not actively seek a buyer because Skype is still growing, but if an interested party comes along they may do more than just glance at the figures. eBay’s auctionsite is still its core business and if that continues to suffer a Skype sale could be the bail out plan.